The Socio-Economic Impact of the Global Downturn on South Africa: Responses and Policy Implications

Research Report. Economic Performance & Development, Human Sciences Research Council. Prepared for Oxfam South Africa November 2010

By the end of 2008, the South African economy had begun to experience the impact of the world recession which had arisen out of the international financial crisis. At that time, the scope and scale of the impacts were uncertain, making it difficult to mount official responses. This study on SA by Ngandu et al is a contribution to a larger multi-country project led by Oxfam on the impact of and responses to the global economic crisis. Although the South African study is mainly conceived as desktop work, a short qualitative study was also mounted to give some entry into the effects of and perceptions around the crisis at household level. The larger Oxfam study focused on the impacts of the global recession through the lens of its impacts on women, and specifically poor women. The brief to the Human Sciences Research Council was to review the range of peoples experiences and government responses. This involved an assessment of the impacts on the South African economy, and in turn on the lives of South Africans, and the extent of vulnerability caused. Government responses were meant to be evaluated in relation to their relevance and adequacy, especially in the context of existing social protection programmes. There was also a request to review civil society responses. This report focuses on the human and social dimensions of the crisis, two areas that are usually drowned by research that centres on the macroeconomic impact and progression of the crisis. By commissioning this work, Oxfam is trying to respond to a research and monitoring gap that has been created by the dominant focus on national or macro-economic aspects of the crisis. For many developing countries the global economic crisis came at a time when they had barely recovered from the food and oil price hikes of 2007/08. As such they were facing what has been described as a compound crisis which has the direct result of worsening the plight of those who were already living in conditions of deprivation and those living on the margins. Although the macroeconomic impact of the crisis in South Africa is not as severe as that seen in the West, there are other human and social impacts that cannot be ignored. For example, a million jobs were lost from the beginning of the downturn in South Africa to the first quarter of 2010, further exacerbating the already high unemployment rate.